IDEAS home Printed from https://ideas.repec.org/p/imf/imfwpa/2011-191.html
   My bibliography  Save this paper

Home Sweet Home: Government's Role in Reaching the American Dream

Author

Listed:
  • Ms. Evridiki Tsounta

Abstract

This paper investigates the role of government intervention in achieving the American dream of homeownership. The study analyzes the role of tax deductions in housing finance, including their impact on homeownership and housing consumption. The role of the Government Sponsored Enterprises in facilitating the creation of a secondary market for mortgage-backed securities is also analyzed as well as the role of the Federal Housing Administration. Cross-country comparisons of how housing is financed in other industrial countries is also provided, emphasizing how other countries have been able to achieve comparable homeownership rates as the United States in a less complicated and fiscally cheaper system. Country experiences of successfully phasing out government intervention are also analyzed.

Suggested Citation

  • Ms. Evridiki Tsounta, 2011. "Home Sweet Home: Government's Role in Reaching the American Dream," IMF Working Papers 2011/191, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2011/191
    as

    Download full text from publisher

    File URL: http://www.imf.org/external/pubs/cat/longres.aspx?sk=25156
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. International Monetary Fund, 2010. "United States: Selected Issues Paper," IMF Staff Country Reports 2010/248, International Monetary Fund.
    2. Gabriel, Stuart A. & Rosenthal, Stuart S., 2005. "Homeownership in the 1980s and 1990s: aggregate trends and racial gaps," Journal of Urban Economics, Elsevier, vol. 57(1), pages 101-127, January.
    3. Nothaft, Frank E & Pearce, James E & Stevanovic, Stevan, 2002. "Debt Spreads between GSEs and Other Corporations," The Journal of Real Estate Finance and Economics, Springer, vol. 25(2-3), pages 151-172, Sept.-Dec.
    4. Joe Peek & James A. Wilcox, 2006. "Housing, Credit Constraints, and Macro Stability: The Secondary Mortgage Market and Reduced Cyclicality of Residential Investment," American Economic Review, American Economic Association, vol. 96(2), pages 135-140, May.
    5. Passmore, Wayne & Sparks, Roger & Ingpen, Jamie, 2002. "GSEs, Mortgage Rates, and the Long-Run Effects of Mortgage Securitization," The Journal of Real Estate Finance and Economics, Springer, vol. 25(2-3), pages 215-242, Sept.-Dec.
    6. Patric H. Hendershott & Gwilyn Pryce & Michael White, 2002. "Household Leverage and the Deductibility of Home Mortgage Interest: Evidence from UK House Purchasers," NBER Working Papers 9207, National Bureau of Economic Research, Inc.
    7. Peter J. Wallison & Bert Ely & Thomas H. Stanton, 2004. "Privatizing Fannie Mae, Freddie Mac, and the Federal Home Loan Banks: Why and How," Books, American Enterprise Institute, number 42378, September.
    8. Edward L. Glaeser & Jesse M. Shapiro, 2003. "The Benefits of the Home Mortgage Interest Deduction," NBER Chapters, in: Tax Policy and the Economy, Volume 17, pages 37-82, National Bureau of Economic Research, Inc.
    9. Roger H. Gordon & James R. Hines, Jr. & Lawrence H. Summers, 1987. "Notes on the Tax Treatment of Structures," NBER Chapters, in: The Effects of Taxation on Capital Accumulation, pages 223-258, National Bureau of Economic Research, Inc.
    10. Mark Doms & Meryl Motika, 2006. "Property debt burdens," FRBSF Economic Letter, Federal Reserve Bank of San Francisco, issue jul28.
    11. Giovanni Dell’ariccia & Deniz Igan & Luc Laeven, 2012. "Credit Booms and Lending Standards: Evidence from the Subprime Mortgage Market," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 44, pages 367-384, March.
    12. Green, Richard K., 1996. "Should the stagnant homeownership rate be a source of concern?," Regional Science and Urban Economics, Elsevier, vol. 26(3-4), pages 337-368, June.
    13. John M. Quigley, 2006. "Federal credit and insurance programs: housing," Review, Federal Reserve Bank of St. Louis, vol. 88(Jul), pages 281-310.
    14. Paul van den Noord, 2005. "Tax Incentives and House Price Volatility in the Euro Area: Theory and Evidence," Economie Internationale, CEPII research center, issue 101, pages 29-45.
    15. Richard K. Green & Susan M. Wachter, 2005. "The American Mortgage in Historical and International Context," Journal of Economic Perspectives, American Economic Association, vol. 19(4), pages 93-114, Fall.
    16. Thomas Hemmelgarn & Gaetan Nicodeme, 2010. "The 2008 Financial Crisis and Taxation Policy," Taxation Papers 20, Directorate General Taxation and Customs Union, European Commission.
    17. James R. Hines, Jr., 1987. "The Tax Treatment of Structures," NBER Chapters, in: Taxes and Capital Formation, pages 37-50, National Bureau of Economic Research, Inc.
    18. Gene Amromin & Jennifer Huang & Clemens Sialm & Edward Zhong, 2018. "Complex Mortgages [Why don’t lenders renegotiate more home mortgages? Redefaults, self-cures, and securitization]," Review of Finance, European Finance Association, vol. 22(6), pages 1975-2007.
    19. DiPasquale, Denise & Glaeser, Edward L., 1999. "Incentives and Social Capital: Are Homeowners Better Citizens?," Journal of Urban Economics, Elsevier, vol. 45(2), pages 354-384, March.
    20. Ambrose, Brent W & Warga, Arthur, 2002. "Measuring Potential GSE Funding Advantages," The Journal of Real Estate Finance and Economics, Springer, vol. 25(2-3), pages 129-150, Sept.-Dec.
    21. Lawrence R. Cordell & Karen E. Dynan & Andreas Lehnert & J. Nellie Liang & Eileen Mauskopf, 2008. "The incentives of mortgage servicers: myths and realities," Finance and Economics Discussion Series 2008-46, Board of Governors of the Federal Reserve System (U.S.).
    22. Mr. John Kiff, 2009. "Canadian Residential Mortgage Markets: Boring But Effective?," IMF Working Papers 2009/130, International Monetary Fund.
    23. International Monetary Fund, 2011. "United States: Selected Issues," IMF Staff Country Reports 2011/202, International Monetary Fund.
    24. Oswald Andrew J., 1996. "A Conjecture on the Explanation for High Unemployment in the Industrialized Nations : Part I," The Warwick Economics Research Paper Series (TWERPS) 475, University of Warwick, Department of Economics.
    25. Joseph Gyourko & Todd Sinai, 2003. "The Spatial Distribution of Housing‐Related Ordinary Income Tax Benefits," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 31(4), pages 527-575, December.
    26. James M. Poterba, 1984. "Tax Subsidies to Owner-Occupied Housing: An Asset-Market Approach," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 99(4), pages 729-752.
    27. Glenn B. Canner & Elizabeth Laderman & Andreas Lehnert & Wayne Passmore, 2002. "Does the Community Reinvestment Act (CRA) cause banks to provide a subsidy to some mortgage borrowers?," Finance and Economics Discussion Series 2002-19, Board of Governors of the Federal Reserve System (U.S.).
    28. Green, Richard K. & White, Michelle J., 1997. "Measuring the Benefits of Homeowning: Effects on Children," Journal of Urban Economics, Elsevier, vol. 41(3), pages 441-461, May.
    29. Altshuler, Rosanne & Dietz, Robert, 2011. "Reconsidering Tax Expenditure Estimation," National Tax Journal, National Tax Association;National Tax Journal, vol. 64(2), pages 459-489, June.
    30. Harvey S. Rosen, 1985. "Housing Behavior and the Experimental Housing-Allowance Program: What Have We Learned?," NBER Chapters, in: Social Experimentation, pages 55-94, National Bureau of Economic Research, Inc.
    31. Joseph Gyourko & Edward L. Glaeser, 2008. "Rethinking Federal Housing Policy," Books, American Enterprise Institute, number 50499, September.
    32. Follain, James R. & Hendershott, Patric H. & Ling, David C., 1992. "Real Estate Markets Since 1980: What Role Have Tax Changes Played?," National Tax Journal, National Tax Association;National Tax Journal, vol. 45(3), pages 253-266, September.
    33. International Monetary Fund, 2004. "The Kingdom of the Netherlands—Netherlands: Financial System Stability Assessment, including Reports on the Observance of Standards and Codes on the following topics: Banking Supervision, Securities R," IMF Staff Country Reports 2004/312, International Monetary Fund.
    34. Lars Jonung & Hans Tson Söderström & Joakim Stymne, 1996. "Depression in the north - boom and bust in Sweden and Finland, 1985-93," Finnish Economic Papers, Finnish Economic Association, vol. 9(1), pages 55-71, Spring.
    35. Follain, James R. & Hendershott, Patric H. & Ling, David C., 1992. "Real Estate Markets Since 1980: What Role Have Tax Changes Played?," National Tax Journal, National Tax Association, vol. 45(3), pages 253-66, September.
    36. Robert M. Dunsky & James R. Follain, 2000. "Tax-Induced Portfolio Reshuffling: The Case of the Mortgage Interest Deduction," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 28(4), pages 683-718.
    37. Rosanne Altshuler & Robert Dietz, 2008. "Reconsidering Tax Expenditure Estimation: Challenges And Reforms," Departmental Working Papers 200804, Rutgers University, Department of Economics.
    38. Jaffee, Dwight M. & Quigley, John M., 2007. "Housing Subsidies and Homeowners: What Role for Government-Sponsored Enterprises?," Berkeley Program on Housing and Urban Policy, Working Paper Series qt6g8986r5, Berkeley Program on Housing and Urban Policy.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Dwight Jaffee & John M. Quigley, 2012. "The Future of the Government-Sponsored Enterprises: The Role for Government in the U.S. Mortgage Market," NBER Chapters, in: Housing and the Financial Crisis, pages 361-417, National Bureau of Economic Research, Inc.
    2. Edward L. Glaeser & Jesse M. Shapiro, 2003. "The Benefits of the Home Mortgage Interest Deduction," NBER Chapters, in: Tax Policy and the Economy, Volume 17, pages 37-82, National Bureau of Economic Research, Inc.
    3. John M. Quigley, 2006. "Federal credit and insurance programs: housing," Review, Federal Reserve Bank of St. Louis, vol. 88(Jul), pages 281-310.
    4. Hembre, Erik & Dantas, Raissa, 2022. "Tax incentives and housing decisions: Effects of the Tax Cut and Jobs Act," Regional Science and Urban Economics, Elsevier, vol. 95(C).
    5. Ambrose, Brent W. & Diop, Moussa, 2014. "Spillover effects of subprime mortgage originations: The effects of single-family mortgage credit expansion on the multifamily rental market," Journal of Urban Economics, Elsevier, vol. 81(C), pages 114-135.
    6. Olsen, Edgar O. & Zabel, Jeffrey E., 2015. "US Housing Policy," Handbook of Regional and Urban Economics, in: Gilles Duranton & J. V. Henderson & William C. Strange (ed.), Handbook of Regional and Urban Economics, edition 1, volume 5, chapter 0, pages 887-986, Elsevier.
    7. Crowe, Christopher & Dell’Ariccia, Giovanni & Igan, Deniz & Rabanal, Pau, 2013. "How to deal with real estate booms: Lessons from country experiences," Journal of Financial Stability, Elsevier, vol. 9(3), pages 300-319.
    8. Dan Andrews, 2010. "Real House Prices in OECD Countries: The Role of Demand Shocks and Structural and Policy Factors," OECD Economics Department Working Papers 831, OECD Publishing.
    9. Hal Martin, 2018. "The Impact of the Tax Cuts and Jobs Act on Local Home Values," Working Papers (Old Series) 1806, Federal Reserve Bank of Cleveland.
    10. Daan Isebaert & Freddy Heylen & Carine Smolders, 2015. "Houses and/or Jobs: Ownership and the Labour Market in Belgian Districts," Regional Studies, Taylor & Francis Journals, vol. 49(8), pages 1387-1406, August.
    11. Poterba, James M. & Sinai, Todd, 2011. "Revenue Costs and Incentive Effects of the Mortgage Interest Deduction for Owner-Occupied Housing," National Tax Journal, National Tax Association;National Tax Journal, vol. 64(2), pages 531-564, June.
    12. Bajari, Patrick & Benkard, C. Lanier & Krainer, John, 2005. "House prices and consumer welfare," Journal of Urban Economics, Elsevier, vol. 58(3), pages 474-487, November.
    13. W. Scott Frame & Lawrence J. White, 2005. "Fussing and Fuming over Fannie and Freddie: How Much Smoke, How Much Fire?," Journal of Economic Perspectives, American Economic Association, vol. 19(2), pages 159-184, Spring.
    14. Coulson, N. Edward & Li, Herman, 2013. "Measuring the external benefits of homeownership," Journal of Urban Economics, Elsevier, vol. 77(C), pages 57-67.
    15. Javier A. Barrios Garcia & Jose E. Rodriguez Hernandez, 2004. "User Cost Changes, Unemployment and Home-ownership: Evidence from Spain," Urban Studies, Urban Studies Journal Limited, vol. 41(3), pages 563-578, March.
    16. Engelhardt, Gary V. & Eriksen, Michael D. & Gale, William G. & Mills, Gregory B., 2010. "What are the social benefits of homeownership? Experimental evidence for low-income households," Journal of Urban Economics, Elsevier, vol. 67(3), pages 249-258, May.
    17. Hernan Winkler, 2011. "The Effect of Homeownership on Geographic Mobility and Labor Market Outcomes," 2011 Meeting Papers 196, Society for Economic Dynamics.
    18. Glaeser, Edward Ludwig, 2011. "Rethinking the Federal Bias Toward Homeownership," Scholarly Articles 8052149, Harvard Kennedy School of Government.
    19. Robert Eisenbeis & W. Frame & Larry Wall, 2007. "An Analysis of the Systemic Risks Posed by Fannie Mae and Freddie Mac and An Evaluation of the Policy Options for Reducing Those Risks," Journal of Financial Services Research, Springer;Western Finance Association, vol. 31(2), pages 75-99, June.
    20. Gordian Rättich & Kim Clark & Evi Hartmann, 2011. "Performance measurement and antecedents of early internationalizing firms: A systematic assessment," Working Papers 0031, College of Business, University of Texas at San Antonio.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:imf:imfwpa:2011/191. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Akshay Modi (email available below). General contact details of provider: https://edirc.repec.org/data/imfffus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.